Bitcoin price has been more volatile than ever, following an early 2020 rally to above $10,000, followed by a record-breaking historic plunge to below $4,000 just days later.
The price action in between has been nearly as explosive, however, over the last four days, the daily has closed with four consecutive daily doji candles, indicating that there’s a great deal of indecision in the crypto market currently, which will all end soon with a massive break in volatility.
Four Consecutive Daily Doji on Bitcoin Price Paint Picture of Indecision
The leading cryptocurrency by market cap has had a rollercoaster ride thus far in 2020. The asset valiantly recovered above $10,000 earlier this year, only to be rejected by peak coronavirus panic on Black Thursday this past March, resulting in a catastrophic 50% drop in Bitcoin.
Bitcoin price has already nearly doubled in value from the extreme low at $3,800. However, a rejection above $7,000 sent the cryptocurrency tumbling back down toward lows. Thus far, support has held, and bulls have managed to prevent a retest of last month’s bottom.
The closely matched game of tug of war going on between bulls and bears can be seen perfectly on Bitcoin price charts, due to the last four daily candle closes as doji candlesticks.
Doji are Japanese candlesticks that typically indicate indecision and an equal fight between buyers and sellers that results in an open and close around the same level.
After four days of indecision, it is likely that a decision will soon be made on which direction Bitcoin will trend for the weeks ahead.
Bollinger Band Width Shrinks Ahead of Massive Break in Volatility
Also depicted on the chart showing the four indecision candles, is the Bollinger Band Width indicator. The Bollinger Bands are composed of a simple moving average and two standard deviation lines that widen or narrow depending on the volatility within the price action.
Powerful volatility shows widening bands. A separate indicator was designed solely to measure the width of the Bollinger Bands, letting traders get a better visual read on how volatile the market currently is.
Bollinger Bands Width on Bitcoin price charts is at the lowest point since the major crash in March, suggesting that fireworks are ahead when this period of indecision and stagnancy finally comes to an end.
Bitcoin price breaking up higher from here would cause a surge in buying ahead of the asset’s coming halving. A fall lower could cause extreme panic once again, which could push Bitcoin to a new bear market low.
The current indecision makes sense, given how critical the next move is across the crypto market. It could set the trend for the coming weeks to months ahead.
Featured image from Pixabay